Autumn Statement 2014: dramatic overhaul of hated Stamp Duty
George Osborne unveiled a dramatic root and branch reform of Stamp Duty today, promising to save homebuyers thousands of pounds.
The Chancellor said the levy was a "tax on aspiration", and said he would remove the 'cliff edges' which distorted the property market.
In a bold move, Mr Osborne said that from midnight tonight stamp duty will be cut for 98% of homebuyers - £4,500 less on the average priced home of £275,000.
Read our roundup of the main announcements
Mr Osborne said the reform represents a tax cut of £800 million per year.
Only homes that cost just over £937,000 will see their stamp duty bill go up. A £5 million pound house will see its stamp duty rise from £350,000 to £514,000.
Use this Stamp Duty calculator which factors in the new rules
The surprise move will be seen as a bid to outflank Labour plans for a Mansion Tax.
Reduces tax for 98%
Concluding his Autumn Statement, Mr Osborne declared: "Mr Speaker, there has been a debate in this country about taxing houses.
"The system I introduce today replaces a badly designed system that has distorted our housing market for decades.
"It reduces the stamp taxes for 98% of people who pay them in this country. It increases the taxes on the most expensive 2% of homes, but only asks people to pay that tax when they buy the house and they have the money.
"And it does not involve a revaluation of hundreds of thousands of homes in this country."
The surprise shake-up emerged after Mr Osborne hailed forecasts of 3% growth for UK plc this year - although he was forced to admit that weak tax revenues meant the deficit was not falling as fast as hoped.
However, the news was overshadowed by his announcement that the existing system of Stamp Duty will be effectively scrapped.
How new Stamp Duty calculation compares to old
No more sticking points
Currently buyers pay a percentage charge on the whole purchase price as soon as it goes over a threshold - creating sticking points in the market.
But in higher rates will only be charged on the proportion of the property value above each threshold.
Shadow chancellor Ed Balls said the Chancellor had questions to answer about living standards, wages and tax receipts, adding: "There is a cost of living crisis."
And taunting the Chancellor's missed target on the deficit, Mr Balls told MPs: "He is going to carry on missing his deficit targets for year after year."
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